7 Smart Tips for Saving for a Down Payment on Your First Home
Saving for a down payment is often the biggest hurdle for first-time homebuyers. Whether you’re planning to save the standard 20% down payment or planning to use a first-time homebuyer program, a clear strategy and consistent habits are essential. Below are seven smart, actionable tips to help you save—plus how SouthStar Bank can support you on your journey to homeownership.
1. Set a Realistic Down Payment Goal
Before you begin saving, it is essential to determine how much you’ll need. While a 20% down payment is standard for conventional loans, many first-time homebuyer programs require as little as 3% to 5%. SouthStar Bank’s H.O.P.E Home Loan1 program goes beyond traditional first-time homebuyer programs to offer even more support to help you get into your first home.
If you are interested in learning what kind of down payment you may need, SouthStar Bank’s local lending experts are available to discuss your options and determine your down payment goal.
2. Open a Separate Down Payment Savings Account
Creating a dedicated savings account to keep your down payment funds separate from everyday spending can be a great help in accomplishing your final goal. Using an account for regular transactions can make saving more challenging to track and control. A dedicated account, on the other hand, allows you to monitor your progress closely and manage your spending more effectively.
3. Automate Your Savings
Setting up automatic transfers into your down payment account ensures consistency and removes the temptation to skip months. Even modest contributions—such as $100 per week—can add up quickly. Some employers also allow you to split direct deposits to multiple accounts. Setting up this feature can be a good tool for accomplishing your down payment savings goals.
4. Cut Back on Expenses
Lowering your daily expenses, whether it be skipping your morning latte or rethinking big trips, can offer a boost to your savings. Work to reduce discretionary spending by limiting takeout, pausing unused subscriptions, or shopping more intentionally. Funnel those extra funds directly into your down payment fund every month.
5. Increase Your Income with a Side Hustle
Consider freelance work, online selling, or part-time gigs. Any extra income can make a big difference when directed straight into your savings account. Currently, there are many credible side-hustles you can do online. Starting an online storefront or pursuing a profitable creative venture can be a great way to make some extra money without interfering with your current work schedule.
6. Use Windfalls to Boost Your Savings
Large windfalls of funds can significantly accelerate your down payment savings. Put tax refunds, work bonuses, or monetary gifts toward your down payment. These unexpected funds can make a significant dent in your savings goal if handled wisely.
7. Take Advantage of First-Time Homebuyer Assistance Programs
Purchasing your first home can feel like a major financial and mental endeavor. Thankfully, many first-time homebuyers qualify for grants, forgivable loans, or down payment assistance programs at the local, state, or federal level.
SouthStar Bank offers several mortgage options to customers looking to purchase their first homes, including the Star Advantage Program and the H.O.P.E. Home Loan Program, which have been designed to meet the unique homebuying needs of a first-time buyer!
Let SouthStar Bank Help You Get Home Faster
Saving for a down payment doesn’t have to feel overwhelming. With clear goals, steady habits, and a knowledgeable partner by your side, your dream of homeownership is within reach.
Ready to take the first step? Connect with your local SouthStar Bank experts to explore your financing options, review savings products, and make your dreams of homeownership a reality!
1Minimum credit score of 620 required to qualify for H.O.P.E Home Loans. SouthStar Bank NMLS# 410624. All loans are subject to approval. Other fees and restrictions may apply.
Source: Investopedia
